TIDMADT1
RNS Number : 8085V
Adriatic Metals PLC
19 April 2021
Adriatic Metals PLC
('Adriatic Metals' or the 'Company')
VARES PROJECT OPERATIONS AND CORPORATE UPDATE
To read the release in full, including seeing all the figures,
please visit
https://www.adriaticmetals.com/investors/asx-announcements/
Vares Project Highlights
- Rupice underground mine plan optimised, targeting the central
higher-grade zones earlier. This has resulted in a 26% increase in
silver-equivalent contained metal mined during the first 24
months.
Demolition of the Old Processing Plant Site is nearing
completion. A geotechnical drilling program to test the structural
integrity of the original concrete pad has been completed.
- Urban Planning Permit and Exploitation Permit for Rupice are
on course to be received later this quarter.
- Exploration permit for the 32km(2) of new concession area,
granted in Q3 2020, is expected within a month.
- Exploration drilling has now re-commenced at Rupice.
- A Vares Project Geology Presentation has been made available
on the Company's website and via a separate ASX and LSE release. To
download the presentation see the announcements page on the
Adriatic Metals see link:
https://www.adriaticmetals.com/investors/asx-announcements/
- Adriatic Metals Chief Geologist, Phil Fox, will host a Vares
Project Geology Webinar on Tuesday, 20 April 2021 at 09:00 London /
10:00 CET / 16:00 Perth / 18:00 Sydney. To register for the
webinar, see link:
https://us02web.zoom.us/webinar/register/WN_oxZb0DJLQJepx7hjS9MNig
- The Company has received several non-binding term sheets for the Vares Project Financing.
Corporate Highlights
- Appointment of Thomas Horton as Head of Corporate Development & Investor Relations.
- Appointment of RBC Capital Markets as the Company's Joint
Corporate Broker, effective 30 March, 2021.
- Adriatic Metals PLC (ASX:ADT, LSE:ADT1) is pleased to provide
an operations update on the Company's flagship Vares Project (the
"Vares Silver Project" or "Project"), and a corporate update.
OPERATIONS - VARES SILVER PROJECT
Definitive Feasibility Study
The Company has appointed Ausenco, Mining Plus & Wardell
Armstrong as the principal consultants for the Project Definitive
Feasibility Study ("DFS"). All workstreams are advancing well with
results expected in Q3 2021.
Mining Plus have optimised the Rupice underground mine design,
targeting the high-grade zones of the deposit earlier in the mine
plan via a new portal location and decline ("Updated Mine Design").
This has increased the silver-equivalent contained metal mined by
26% during the first 24 months of the mine plan.
Figure 1 plots both the Updated Mine Plan and the
Pre-feasibility Study ("PFS") mine plan, showing the contained
silver-equivalent metal mined (on a monthly basis) over the first
24 months for each mine plan. Both mine plans have a fixed mining
rate of circa 2,200 tonnes per day. Therefore, the higher
silver-equivalent contained metal in the Updated Mine Plan
(percentage shown on right hand axis) is due to higher grade ore
mined.
Figure 1. Chart Showing Contained Metal Mined in the PFS vs the
Updated Mine Design
Note: the silver equivalent assumptions are the same as those
disclosed in Table 1 of Updated Rupice Mineral Resource Estimate,
as announced 01 September 2020. For a link to the announcement see
link:
https://www.adriaticmetals.com/investors/asx-announcements/
The new portal location and decline design for the second portal
has been moved to a lower position, further down the hill at
Rupice. The second portal provides a more direct route to the
central zone high-grade zone (as shown in purple in Figure 2),
thereby bringing it forward in the mine plan.
-
Figure 2. Cross section of the Update Mine Design
Note: the silver equivalent assumptions are the same as those
disclosed in Table 1 of Updated Rupice Mineral Resource Estimate,
as announced 01 September 2020. For a link to the announcement see
link:
https://www.adriaticmetals.com/investors/asx-announcements/
-
A geotechnical drilling program has commenced for the new portal
and decline location used in the Updated Mine Design. The program
will consist of two holes that will ultimately follow the decline's
route from surface to the Rupice orebody. The geotechnical drilling
for the proposed site of the ventilation raise shaft has been
completed.
The old Veovaca processing plant site is located 5km from Vares
and processed ore from the historical Veovaca open pit until the
late 1980s ("Old Processing Plant Site"). The Vares Project will
reuse this brownfield site for the new processing plant ("Vares
Processing Plant").
In Q4 2020, demolition and remediation work of the Old
Processing Plant Site commenced and is currently nearing
completion. Most of the concrete and steel structures have been
demolished and are in the process of being sorted and removed. All
removed concrete is being stored and will be recycled as base for
the haul road. The original concrete pad will remain as the
foundation for the new Vares Processing Plant and a geotechnical
drilling program to test its structural integrity has been
completed.
Environmental and Social Impact Assessment ("ESIA")
The ESIA, led by Wardell Armstrong International, is moving into
the final stage of environmental baseline data collection and
monitoring. This is expected to be completed by the end of May -
albeit some key data will continue to be collected after this date
to provide additional background information.
Concurrently, work has started on the impact prediction and
analysis and development of mitigation measures, which will lead to
the development of various management plans (e.g. social, community
health and safety, water, waste, biodiversity, air quality and
noise, and emergency preparedness) as well as the mine closure
plan. These plans will be key to implementing the various
mitigation measures during project construction, operation and
closure. All is progressing as planned. The in-house environmental
team continue to work closely with the lead engineering
consultants, Wardell Armstrong International and Ausenco, to ensure
that the DFS and the ESIA provide the best outcomes technically,
environmental and socially. The ESIA will be developed in
accordance with some of the most demanding practices globally;
namely the EBRD Performance Requirements and IFC Performance
Standards, which also align with the Equator Principles.
In line with EBRD's Project Support Agreement, as announced on
27 October 2020, the Company appointed ERM Romania to conduct an
Environmental and Social Due Diligence ("ESDD"). The ESDD report
concluded that it "did not identify any hindrances to permitting
the project". In March 2021, Wardell Armstrong International
produced an updated Scoping Study Report, which supported the
positive comments made in the ESDD.
Permitting
The Rupice underground exploitation permitting process is
progressing. The Company is in the process of completing the
acquisition of the various land parcels in and surrounding the
Rupice deposit. In addition, applications have been made to convert
the land from a Forestry and Agricultural classification to an
Industrial classification. All consents for the conversion have
been received by the relevant private landowners, and positive
opinions received for the adaption of the Vares Municipal Spatial
Plan, confirming the area as Industrial Land, have been received.
It is expected that the Urban Planning Permit for Rupice and the
Exploitation Permit will be issued later this quarter.
As announced on 02 September 2020, the Company was granted
32km(2) of newly granted concession area surrounding the Vares
Project (areas shown in blue in figure 3), in addition to the
original 9km(2) (areas shown in red in figure 3). The Company is
awaiting the issuance of the Exploration Licence before drilling
can commence on the expanded areas. This is expected to be received
within a month.
Figure 3. Map of the Vares Project Mineral Concession Area
Exploration
Following warmer than expected Spring weather, exploration
drilling has now re-commenced. Initially, one diamond core drill
rig has been deployed to the Rupice area, with a second diamond
core drill rig planning to be mobilised on the northern extensions
of Rupice in the coming month. In addition, an aeromagnetic and
radiometric survey is expected to commence later this month across
the entirety of the current 41km(2) of granted concession area. The
Company will update the market in due course on the progress of
these programs.
The Company has produced a Vares Silver Project Geology
Presentation that is available on its website. The presentation
covers in detail the geology of the Project and the proposed
exploration work program for 2021. To download the presentation see
the ASX Announcements page on the Adriatic Metals website:
https://www.adriaticmetals.com/investors/asx-announcements/
Adriatic Metal's Chief Geologist, Phil Fox, will host a geology
focused webinar on Tuesday, 20 April 2021 at 09:00 London / 10:00
CET / 16:00 Perth / 18:00 Sydney. The webinar will run through
Vares Silver Project Geology Presentation. An open Q&A session
will be available at the end of the session. To register for the
webinar see link:
https://us02web.zoom.us/webinar/register/WN_oxZb0DJLQJepx7hjS9MNig
Community Engagement
Active engagement with stakeholders remains ongoing and has been
adapted in reaction to the challenges of the pandemic. Smaller
focus groups have been organised in order to ensure an effective,
integrated two-way communication with all stakeholders. Stakeholder
engagement will continue with this format for the foreseeable
future. The Public Liaison Committee, which was set up to provide
local communities and institutions a two-way forum through which to
communicate information about the Vares Silver Project, had its
quarterly meeting in January. This was the 4(th) meeting since
inception and all feedback from the meeting was positively
received.
The Company is working alongside the European Bank for
Reconstruction and Development and Globe 24-7 in creating the
syllabus for a mining engineering vocational course at Mješovita
srednja škola Nordbat 2 (the local Vares High School). The course,
which is scheduled to commence in August 2021, will be the
first-time in 30 years that mining has been taught at the
school.
Working alongside the local Scouts Association in Vares and
World Vision, employees of Eastern Mining worked on a project
called "I love Vares". This was a community wide effort to clear up
litter in the town and around the regional Vares roads and rivers,
as well as distribute leaflets and put noticeboards on the
importance of looking after the environment. For more information
see link:
https://www.easternmining.co.uk/news/eastern-mining-team-join-vares-clean-up-initiative/
Funds from the cancelled Eastern Mining end of year celebration
have been donated to a number of local humanitarian institutions in
the Vares region. The initiatives that received the donations were
chosen by employees of Eastern Mining. For more information see
link: https://www.easternmining.co.uk/content/?contentID=3106
Concentrate Marketing
The Company has appointed leading commodity trading house,
Bluequest Resources AG ("Bluequest") to manage the marketing and
offtake of the Vares Silver Project's concentrates. Bluequest are
active in the global physical trade of refined non-ferrous metals,
minerals, non-ferrous and precious metal concentrates. The Company
expects to receive offtake term sheets this quarter.
A separate marketing study has been initiated by an external
consultant for the offtake of the barite by-product. The study
targets specifically the sale of barite into the oil and gas
drilling services markets of the Middle East, Americas and Europe,
as well as the global chemicals markets. Analysis has indicated
that these are the most viable markets for the barite by-product
from the Vares Silver Project. A confidentiality agreement has been
signed with a European chemical grade barite refiner, with samples
provided for initial mineralogical analysis and beneficiation
test-work.
Zinc Concentrate Treatment Charge Market Update
As reported in recent media, the zinc concentrate market is
experiencing a tightening, which has resulted in a significant fall
in treatment charges ("TC") over the past 12 months. On 07 April
2021, Fastmarkets reported that the spot zinc concentrate TC (CIF
China) ranges from US$60 to US$74 per tonne. This is substantially
lower than the 2020 contractual high of US$300 per tonne. The
Project PFS used a TC of US$230 per tonne of zinc concentrate.
Therefore, the current spot TC is 67-74% lower than that used in
the Vares Project PFS. It is estimated in the PFS that over the
life of mine the Project will produce 655,224 dmt of zinc
concentrate and is attributable to circa 30% of Project revenue.
The treatment charges for the silver and lead concentrates are not
expected to have materially altered since the PFS was
completed.
Logistics
A logistics study has been initiated to confirm the most
effective routes to market for the DFS. The study includes the
shipping of the multiple concentrate streams to end product
off-takers. The study also includes the use of the Adriatic ports
of Ploce and Rijeka in Croatia. Discussions have been initiated
with major shipping lines regarding the loadout and sea freight of
concentrate from these ports based on a single source supplier for
the complete logistics route.
Infrastructure
Rail
The Company is in advanced discussions with state-owned railway
company, Railways Federation Bosnia and Herzegovina ("Railways
FBiH"). Railways FBiH own the railway line and rail infrastructure
in Vares, as well as the surrounding land around the terminal that
the Company proposes to use for temporary storage and loading of
containers onto the wagons ("Vares Rail Head").
Figure 4. Plan view of the Vares Rail Head, Vares
The scope in discussion involves Railways FBiH recommissioning
the 17km stretch of line from Breza to Vares, providing the Company
with locomotives and rolling stock on an ongoing basis, as well as
conducting ongoing maintenance of the rail infrastructure and
rolling stock as required. The line between Breza and Podlugovi,
where the line from Vares and Breza connects into the electrified
Bosnian rail network, is currently active.
Preliminary discussions with Railways FBiH confirm that the
existing rail infrastructure is in good condition and is capable of
supporting the Vares Project's operational requirements in terms of
weight, volume, capacity and duration, with minimal additional
investment required by the Company. Each train load will transport
concentrate across 18 wagons, with a maximum of two complete train
will be loaded per day.
The Vares Majdan station, located 1km south of the Vares Rail
Head may also be utilised for holding inbound rolling stock, as
well as for marshalling and temporary storage as required. The
Vares Majdan station has capacity to hold circa 30 containers,
double stacked if required, as well as 18 wagons. The railway line
from Breza to Vares Majdan was last used in 2012.
Following the conclusion of an executed agreement between
Eastern Mining & Railways FBiH, which is expected in due
course, reconditioning of the line is expected to commence
immediately thereafter. The Company will update the market on
further discussions and agreements made with Railways FBiH in due
course.
Road
A total of 28km of haulage road is required for the Project. The
route utilises 13km of pre-existing forestry roads that will be
upgraded, however in order to avoid dwellings and villages, 15km of
new road will be constructed. The haulage road's route has been
finalised and surveying has commenced. Based on the work conducted
to date, no significant bridge construction or major civil works
are required.
Water
The nearby Mala Rijeka will be the primary raw water source for
the Vares Processing Plant, as described in the PFS, with a raw
water storage pond placed upstream of the Old Processing Plant
Site's historical tailings dam. Further refinements have been made
on raw water storage pond, with its new location now downstream of
the Old Processing Plant Site's historical tailings dam. It will be
closer to the Vares Processing Plant and also smaller in size.
Supporting the primary water supply, a secondary raw water
source has been secured using a pre-existing pipeline that served
the Old Processing Plant Site. A contract has been agreed with
local services provider, JKP Vares, to supply potable water at flow
rate of eight litres per second.
Human Resource Development
Hiring continues to occur aggressively, with a total employee
count of 78. To support the continued growth in the workforce, the
Company has appointed human resource consultants Globe 24-7. Globe
24-7, who are mining industry specialists, will support the
Project's hiring process as well as creating and implementing its
Human Resources Framework and Workforce Development Program.
Vares Project Key Appointments
Adriaan Van der Merwe has been appointed as Processing Manager.
Mr. Van der Merwe has 12 years' operational experience in
metallurgical and mineral processing, as well as 18 years'
experience in project management, commissioning and mineral
processing advisory. He has a Bachelors and Masters Engineering
Degree in Extractive Metallurgy.
Mark Richards has been appointed as Logistics and Procurement
Manager. Mr Richards has over 25 years of logistics, procurement
and project management experience, in both military and commercial
environments. His 18-year career as a British Army Officer in The
Royal Logistic Corps included deployment to the Adriatic ports in
Croatia, as well as managing various supply-chain locations
throughout Bosnia and Kosovo.
Raska Project Key Appointment
Jelena Aleksi ć has been appointed as General Manager, Serbia.
She joins Adriatic from Rio Tinto, where she led the external
affairs team for their Jadar lithium-borate project in Western
Serbia. Ms Aleksi ć is a corporate relations professional with 20
years of experience in government relations, public affairs and
communications. She has also held the position of Director
Corporate Affairs for Philip Morris in Serbia and Montenegro and
worked for the European Commission as a Special UNDP Advisor for
the EU to the Serbian Finance Ministry. Ms Aleksi ć has a Masters
and PhD degree in Economics
CORPORATE
Vares Project Financing
The Company has received several non-binding term sheets for the
Vares Project Financing. The term sheets have been received from a
number of banks, as well as alternative financiers. The Company
will continue to review these options to ensure that financing
occurs in the best interest of shareholders. The Company will
update the market as the process advances.
Corporate Appointment
The Company has appointed Thomas Horton as Head of Corporate
Development & Investor Relations. He joins Adriatic from Giyani
Metals Corp, where he was the Vice President for Business
Development. Mr. Horton has 14 years of mining industry experience
and has held various roles in project engineering, corporate
broking, and corporate development. Mr. Horton has a Masters degree
in mechanical engineering from the University of Manchester and an
MBA from London Business School.
Appointment of Joint Corporate Broker
The Company has appointed RBC Capital Markets as the Company's
Joint Corporate Broker, effective 30 March 2021. RBC Capital
Markets will work alongside the Company's existing Joint Corporate
Brokers, Stifel Nicolaus Europe Limited and Canaccord Genuity.
Authorised by, and for further information please contact:
Paul Cronin
Managing Director & CEO
info@adriaticmetals.com
**S **
Market Abuse Regulation Disclosure
The information contained within this announcement is deemed by
Adriatic (LEI: 549300OHAH2GL1DP0L61) to constitute inside
information as stipulated under the Market Abuse Regulations (EU)
No. 596/2014. The person responsible for arranging and authorising
the release of this announcement on behalf of Adriatic is Paul
Cronin, Managing Director and CEO.
For further information please visit www.adriaticmetals.com ;
@AdriaticMetals on Twitter; or contact:
Adriatic Metals PLC
Paul Cronin / Thomas Horton Tel: +44 (0) 7866
913207
Canaccord Genuity Limited (Joint Corporate
Broker)
Jeremy Dunlop (Australia) Tel: +61 2 9263
2700
James Asensio (UK) Tel: +44 (0) 207
523 8000
RBC Capital Markets (Joint Corporate Broker)
Marcus Jackson / Jamil Miah Tel: +44 (0) 20
7653 4000
Stifel Nicolaus Europe Limited (Joint Corporate
Broker)
Ashton Clanfield / Callum Stewart Tel: +44 (0) 20
7710 7600
Tavistock Communications Limited
Charles Vivian Tel: +44 (0) 7977
297 903
The Capital Network
Julia Maguire / Lelde Smits Tel: +61 2 8999
3699
COMPETENT PERSONS REPORT
The information in this report which relates to exploration
results is based on information compiled by Mr Phillip Fox, who is
a member of the Australian Institute of Geoscientists (AIG). Mr Fox
is a consultant to Adriatic Metals PLC, and has sufficient
experience relevant to the style of mineralisation and type of
deposit under consideration and to the activity he is undertaking
to qualify as a Competent Person as defined in the 2012 Edition of
the "Australian Code of Reporting of Exploration Results, Mineral
Resources and Ore Reserves". Mr Fox consents to the inclusion in
this report of the matters based on that information in the form
and context in which it appears.
ABOUT MINING PLUS
Mining Plus is a leading mining technical services provider that
specialises in geological, mining engineering, geotechnical
engineering, mine ventilation and operational management. Mining
Plus is part of the Byrnecut Group of Companies. Byrnecut is one of
the world's leading underground mining contractors.
ABOUT WARDELL ARMSTONG INTERNATIONAL
Wardell Armstrong are a multidisciplinary Environmental,
Engineering, and Mining consultancy working in the Infrastructure
& Utilities, Property & Development, and Mining &
Minerals Sectors. Its history dates back over 180 years and has a
reputation for high quality service, both in the UK and
internationally.
ABOUT AUSENCO LIMITED
Ausenco Limited is a global company providing consulting,
engineering, project delivery and asset operations, management and
optimisation solutions to the minerals & metals, oil & gas
and industrial sectors. Headquartered out of Brisbane, Australia
the global team is based across 26 offices in 14 countries, as well
as many project locations.
Ausenco were the appointed engineering consultants that produced
the Vares Silver Project PFS, released in October 2020.
ABOUT GLOBE 24-7
Since 2003, Globe 24-7 (Globe) has been conducting human
resource consulting & recruitment assignments for international
mining, power & energy companies around the world. Globe's goal
is to partner with companies who seek to build great teams with
contemporary, creative and custom-fit human resource and
recruitment solutions. Globe primarily works with small &
mid-tier organizations through its HR Consulting, RPO, Search,
Training and HR Systems divisions.
ABOUT ADRIATIC METALS
Adriatic Metals Plc (ASX:ADT, LSE:ADT1) is a precious and base
metals explorer and developer that owns the world-class Vares
Silver Project in Bosnia & Herzegovina and the Raska Project in
Serbia.
The Vares project's captivating economics and impressive
resource inventory have attracted Adriatic's highly experienced
team, which is expediting exploration efforts to expand the current
JORC resource. Results of a recent pre-feasibility study announced
on 15 October 2020 indicate a post-tax NPV 8 % of US$1,040 million
and IRR of 113%. Leveraging its first-mover advantage, Adriatic is
rapidly advancing the project into the development phase and
through to production with significant cornerstone investment of
US$28 million from Queen's Road Capital Investment and EBRD.
There have been no material changes to the assumptions
underpinning the forecast financial information derived from the
production target in the 15 October 2020 announcement and these
assumptions continue to apply. There have been no material changes
to the assumptions and technical parameters on the updated Mineral
Resource Estimate announced on 1 September 2020 and these
assumptions continue to apply.
Adriatic Metals acquired TSX-listed Tethyan Resource Corp in
2020, to advance the former Kizevak and Sastavci polymetallic mines
in the Raska District, southern Serbia.
DISCLAIMER
Forward-looking statements are statements that are not
historical facts. Words such as "expect(s)", "feel(s)",
"believe(s)", "will", "may", "anticipate(s)", "potential(s)"and
similar expressions are intended to identify forward-looking
statements. These statements include, but are not limited to
statements regarding future production, resources or reserves and
exploration results. All of such statements are subject to certain
risks and uncertainties, many of which are difficult to predict and
generally beyond the control of the Company, that could cause
actual results to differ materially from those expressed in, or
implied or projected by, the forward-looking information and
statements. These risks and uncertainties include, but are not
limited to: (i) those relating to the interpretation of drill
results, the geology, grade and continuity of mineral deposits and
conclusions of economic evaluations, (ii) risks relating to
possible variations in reserves, grade, planned mining dilution and
ore loss, or recovery rates and changes in project parameters as
plans continue to be refined, (iii) the potential for delays in
exploration or development activities or the completion of
feasibility studies, (iv) risks related to commodity price and
foreign exchange rate fluctuations, (v) risks related to failure to
obtain adequate financing on a timely basis and on acceptable terms
or delays in obtaining governmental approvals or in the completion
of development or construction activities, and (vi) other risks and
uncertainties related to the Company's prospects, properties and
business strategy. Our audience is cautioned not to place undue
reliance on these forward-looking statements that speak only as of
the date hereof, and we do not undertake any obligation to revise
and disseminate forward-looking statements to reflect events or
circumstances after the date hereof, or to reflect the occurrence
of or non-occurrence of any events.
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END
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